Impact of Critical Status on Pension Funds in 2020

Slide Note

Ongoing funding crisis for multiemployer pension funds in the U.S. as assessed through withdrawal liability when employers stop contributing to underfunded pension funds. The Pension Protection Act established funding zones categorizing pension funds based on their funding levels, requiring annual funding notices and facing insolvency risks which can lead to increased withdrawal liability. Specific Teamster pension funds are highlighted for being in critical or declining status, facing potential insolvency in the coming years.

cel_own Follow

Uploaded on Mar 17, 2025 | 0 Views

Download Presentation

Please find below an Image/Link to download the presentation.

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.

You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.

Download Presentation

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.

E N D

Presentation Transcript

Critical Status Pension Funds 2020

Critical Status Pension Funds 2020 Ongoing funding crisis for multiemployer pension funds throughout U.S. Withdrawal Liability is assessed when an employer stops contributing to an underfunded pension fund Exit tax Employer s share of the unfunded liability (UVBs) Calculated based on fund s designated look-back period (5 yrs, 10yrs, 25 yrs) Withdrawal Liability increases upon a fund s insolvency/failure

Critical Status Pension Funds 2020 Pension Protection Act established funding zones Red Zone / Critical Status = under 65% funded Critical & Declining = insolvent within 14 years Yellow Zone = 65 79% funded Green Zone = 80% or more funded Pension funds must provide Annual Funding Notice to all contributing employers Typically received Q1/Q2 each year Primarily an issue with Teamster pension funds

Critical Status Pension Funds 2020 Insolvency Date Insolvency Date Name of Teamster Fund Zone Name of Teamster Fund Zone Southwestern PA & Western MD Teamsters & Employers Pension Fund Teamsters Industrial Employees Pension Fund Critical & Declining 2025 Critical 2047 Trucking Employees of North Jersey Pension Fund (Local 560) Critical & Declining 2021 Teamsters Local 469 Pension Plan Critical & Declining 2027 New England Teamsters Pension Fund Critical & Declining 2033 Teamsters Local 408 Pension Fund Critical & Declining 2020 N/A (2029 before MPRA cuts) Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund Western PA Teamsters & Employers Pension Fund Critical N/A Critical New York State Conference of Teamsters Pension Fund 2045 (with MPRA cuts) Teamsters Local 445 Pension Fund Critical 2040 Critical Cumberland, MD Teamsters Construction & Miscellaneous Pension Fund Critical N/A

Critical Status Pension Funds 2020 Teamster NPLA Article V(J): Any Employer who has an obligation under this Agreement to a local pension fund may elect to have the contributions remitted to the TNPLP Fund if the pension fund is in critical status ("Red Zone"). The Employer must make the election within 120 days of the date it receives annual written notice of the local pension fund s zone status certification, or the execution date of this Agreement whichever is later, and shall provide written notice to the local pension fund and the Union of its election as soon as practicable thereafter.

Critical Status Pension Funds 2020 Teamster Opt-Out Analysis: Determine if any prior contributions into the Red Zone fund during look-back period Evaluate potential Withdrawal Liability exposure Other considerations? Construction Rule If the employer does not resume work in the area within five years, the Withdrawal Liability is eliminated Look-back period Free Look

Critical Status Pension Funds 2020 Teamster Opt-Out Options: No prior contribution = opt out recommended Prior contributions & no work expected in area for 5 years = opt out likely recommended Prior contributions & future work expected in area within 5 years = weigh amount of withdrawal liability vs. potential income of future work Send opt out notice to pension fund; copy to IBT & PLCA